PIC still in favour of MTN deal

Johannesburg, 17 Jun 2009

The Public Investment Corporation (PIC), MTN's largest shareholder, says it is still in favour of the $23 billion deal with Bharti, but is waiting for more information.

CEO Brian Molefe says the state organisation, which has 13.5% in MTN, supports the deal “in principle”, reports Bloomberg.

Molefe told Bloomberg that his understanding was that “the price offered was indicative and they are still in talks”.

“We can understand the strategic imperative and the need for the transaction from MTN's point of view,” Molefe said. “They still have to finalise the price, what the takeover means, and who has what say in the company. We are waiting for these details,” Bloomberg quoted him as saying.

Earlier this month, he said the PIC supports the deal conditionally, but there is some room for improvement on price. Molefe said the fund has not made a final decision yet on whether to support the vote on the deal.

Other South African analysts, with stakes in the company, have also said they need more clarity on the deal on issues such as control and ownership.

Recently, Absa Investments analyst Chris Gilmour said: “I think it's very complicated at the moment.” Irnest Kaplan, independent analyst and MTN shareholder, concurs that the information on the proposed deal is too sketchy. He says the deal is difficult to digest as a shareholder. “The deal is very convoluted.”

Reuters has also reported that MTN's second-largest shareholder, Lebanon's Mikati family, with 10.2% through the M1 Group, supported merger talks with Bharti and would vote in favour of the $23 billion cash and share swap. Azmi Mikati, CE of the family's M1 Group, said a proposed deal, under which the firms will take stakes in each other, was "fair for all parties" and added the family would back it if a firm offer was made.